Fannie Mae is pressing its seller/servicers to repurchase $14.5 billion of bad mortgages but only a small portion of those buyback requests involve loans originated after 2008.
“Less than 0.25% of loans in our new single-family book of business, which were acquired after 2008, have been subject to a repurchase request,” the mortgage giant said in its second quarter financial report.
Originators say they maintain tight lending standards because of the ever-present fear and cost of Fannie Mae/Freddie Mac buybacks. The Federal Housing Finance Agency is working with the GSEs to develop new representation and warranty agreements that would provide lenders greater protection from buybacks.
The new “reps and warrants will shift the focus of loan quality review to the time of sale to an Enterprise and to give lenders greater certainty that a loan that performs successfully for a period of time will not later be subject to repurchase except for very limited reasons,” FHFA says in a July 31 letter to Congress.
More than 2% of loans originated between 2005 and 2008 have been subject to repurchase requests.
The second quarter financial report also reveals that Fannie economists suspect house prices hit bottom in the first quarter and rose 3.2% in the second quarter. While values might decline in early 2013, it should “not decline below first quarter 2012 levels,” the GSE says in its securities filing.
Fannie forecasters expect single family originations will total $1.49 trillion at the end of this year, up 9% from 2011. Refinancings will total $980 billion by yearend, compared to $900 billion in 2011.
Fannie also noted that some of its largest seller/servicers have reduced or eliminated their wholesale and correspondent channels. “As a result we are acquiring an increasing portion of our business volume directly from smaller financial institutions and some of our servicing volume is shifting to smaller or non-traditional servicers.”